We’re off to a big start for the fresh week in the biotech space, as the lull in volume that generally comes on the back of the holiday period has subsided, and both the institutional and the retail capital has returned to the fray. As ever, increased volume translates to increased volatility, and combined with the flurry of catalysts that have hit press over the last few days in the biotech sector, there have been plenty of movers and shakers, at both ends of the market.
With this in mind, here are two of the biggest movers from the end of last week, with a look at what’s driving the action in each, and what we expect to play out as the companies push forward into the first quarter of 2017.
The two companies in focus are EnteroMedics Inc (NASDAQ:ETRM) and Stemline Therapeutics Inc (NASDAQ:STML).
So, let’s kick things off with EnteroMedics. This one’s an interesting one. The company has developed a treatment that tit calls vBloc. It’s designed as a weight loss therapy, and it’s entering a market that already contains well known (and very well established) therapies such as gastric bands, gastric sleeves, that sort of thing.
The treatment is basically an electrical pad that attaches to what’s called the vagus nerve. The vagus nerve is a nerve that forms a major part of the central nervous system (CNS), and is responsible for a host of things, one of which is the sensation of hunger and satiation. vBloc is the electric pad, and a physician attaches it to the vagus nerve, where it gets to work stimulating the nerve. The treatment basically makes people feel full, even if they are not.
Here’s the problem: the treatment is not covered under any major insurers’ policies in the US. This means that when patients need to choose between a gastric band and a vBloc, they are faced with a close to $18,000 out of pocket payment with the latter, whereas the former would be (basically) free under an insurance policy.
Anyway, EnteroMedics is running up at the moment on the announcement that the company has secured two new facilities to implant its device. It’s not massive news, but regardless, EnteroMedics is up more than 700% on its January open. We don’t expect tis run to continue, unless the company can put out some news that builds on these two fresh facilities.
Ok, moving on, let’s look at Stemline.
This one’s a little more clear cut. Stemline is developing a treatment called SL-401, and it’s targeting a therapy called blastic plasmacytoid dendritic cell neoplasm (BPDCN). For the scientists out there, the drug is a recombinant fusion protein composed of the catalytic and translocation domains of diptheria toxin (DT) fused via a Met-His linker to IL3. For the no scientists, BPDCN is a blood disorder, similar in manifestation to a blood cancer such as leukemia. It’s very serious, incurable, and only treatable (from a reductive perspective) by chemotherapy and – and this is where Stemline comes in to play – through allogeneic stem cell therapy.
We’re not going to go too much in to the science for the purposes of this discussion, as it would take all day, but basically, Stemline is hoping that by introducing healthy stem cells in to the blood system (by way of its 401 drug candidate) it can reverse the progression of the condition. There’s data that suggests there is credence in this hypothesis, and this is the root of the company making this list. At the end of last week, Stemline announced that it expects to be able to submit a Biologics License Application (BLA) for the drug at some point during the second half of 2017. Stemline is up a little over 15% on the news. We expect the company to maintain these gains heading into BLA submission, assuming things run smoothly going forward.